RAAC: Critical considerations for commercial landlords and tenants in Scotland

Key takeaways:

• Reinforced autoclaved aerated concrete (RAAC) is a type of concrete with an anticipated working lifespan of about 30 years.
• The ICE has urged building owners and managers to investigate whether RAAC is present in their premises.
• If RAAC is present in a leasehold property, then responsibility for any remediation necessary will be determined by the lease.
• Whilst many commercial leases pass repairing obligations to the tenant this is not always the case and the wording must be carefully scrutinised.
• Absent clear words in the lease, the common law rules on repair may apply. In Scotland, it is a matter of established common law that a landlord must carry out repairs throughout the lease including any constituent part of the premises, even where those parts have become worn out due to the passage of time.

Alarming headlines about the presence of “RAAC” in Scottish schools, public buildings and housing stock cannot have gone unnoticed over recent months.

RAAC is reinforced autoclaved aerated concrete. It was commonly used as building material in the period between 1950 and 1990 and has been found to be less durable than traditional concrete and vulnerable to sudden and catastrophic failure. It is believed to have a working lifespan of about 30 years.

The Scottish Government has recently established a cross sector working group to establish the extent of its use in Scotland.

Whilst media attention has focused on the presence of RAAC in public buildings it is thought that RAAC was also used in commercial buildings, such as offices, shops and factories. The Institution of Structural Engineers (ICE) have urged owners and occupiers of these buildings to investigate whether RAAC is present too.

 

So what should commercial landlords and tenants do in these circumstances, and what if RAAC is found?

Prudent landlords, tenants and building occupiers should commission a survey to establish whether RAAC is present in any buildings they own or occupy which were constructed between 1950 and 1990. Failure to do so now could not only give rise to substantial liabilities in the future but also could lead to problematic issues with prescription of claims.

Whilst tenants will be able to investigate by virtue of occupying the premises, landlords will need to review the lease to establish if they have a right to enter the property for this purpose as under common law the tenant enjoys the right to peaceful possession.

Most leases allow the landlord to inspect the premises on reasonable notice and with as little disruption to the tenant as possible. However, such a right isn’t implied. So if the lease doesn’t provide for it then the landlord can’t do it and would have to conduct an inspection when the lease expires.

If, on investigation, RAAC is found in the building then the risk of it failing will need to be assessed and, where necessary, remedial action taken. The assessment and works should be discussed with a suitably qualified building surveyor or structural engineer. The lease may also regulate who is responsible for meeting the professional costs incurred in the inspections and remedial work.

 

Who is responsible for any remedial works?

In terms of who is legally responsible for any remedial works which may be required, this will be determined by the lease.

Most commercial leases include a provision which requires the tenant to ‘put and keep’ the premises in “good and substantial repair”.

If RAAC is present but the property is not in actual disrepair, then this obligation won’t be triggered. The mere presence of RAAC is not, by itself, evidence of a dilapidation or a want of repair. However, if the presence of RAAC has caused the condition of the premises to deteriorate so it is no longer in good and substantial repair then the tenant will usually be responsible for dealing with the problem. This may involve introducing a regular inspection and assessment regime for the affected parts of the building or in more serious cases propping-up, removal and replacement of the declining RAAC.

Liability may be complicated further where the leased premises form part of a wider development and where the RAAC is present in the common parts. Where relevant the lease will have to be closely reviewed to consider who is responsible for any repairs to the common parts.

 

Extraordinary repair and / or inherent defect?

Where RAAC has been widely used in the construction of the building then the works required to fix any problems may be extensive and costly. Such remediation could amount to an “extraordinary repair”.

At common law extraordinary repairs are the responsibility of the landlord and the lease wording would have to be scrutinised to establish if this liability has been transferred to the tenant. Most commercial “full repairing and insuring” leases adopt wording which seeks to do just that but sometimes tenants are able to carve-out liability for particular types of repair like inherent defects, which may be relevant where RAAC has been used.

If repairs are required then a formal notice can be served by the landlord, or tenant, on the person responsible for the repairs identifying the issues and requiring the property to be brought up to the repairing standard in the lease within a reasonable time. Where the landlord has been unable to inspect the property during the currency of the lease then this notice can also be prepared on its expiry and will have the same effect. Any failure to comply with the notice by either party would give rise to more formal legal remedies.

The full extent and implications of RAAC in commercial buildings are still unknown, and the legal position will vary from situation to situation. If you own or occupy a building under a commercial lease which was constructed between 1950 and 1990 and suspect RAAC may be present and would like advice please do get in touch: